I wonder whether he's just a "weak hand" about to jump ship and how people with more coherent plans look at this situation.
I hold a PP and am sticking with the program. I don't check my balances often, but looked at them just to make this post. On 4/8 before the "crash" gold was 22.7% of my portfolio; yesterday (4/17) it was 20.4%. A rather small blip when viewed in those terms, and still solidly within the 15/35 rebalance band. So I'm not doing anything.
Gold is a volatile asset --- we all know this --- and what volatility gieveth, volatility taketh away. The same is true for stocks and long term bonds. In order to succeed in investing in volatile assets, one must find some way to be dispassionate about price moves in both directions.
Gold crash
Yes, some perspective always helps. Here's a perspective thought experiment:
If you had to choose between GLD and AAPL right now without considering your other investments and you had to hold it for a year (and you're not allowed to say both or neither -- those are my answers to the Kobayashi Maru problem
), what would it be?
A more serious Q, especially for the dividend folks -- what do you think of the large miners right now, like Newmont or BHP Billiton? They look awfully beat up -- getting near 2009 levels -- and consequently are sporting huge yields.
If you had to choose between GLD and AAPL right now without considering your other investments and you had to hold it for a year (and you're not allowed to say both or neither -- those are my answers to the Kobayashi Maru problem
), what would it be?A more serious Q, especially for the dividend folks -- what do you think of the large miners right now, like Newmont or BHP Billiton? They look awfully beat up -- getting near 2009 levels -- and consequently are sporting huge yields.
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George the original one
- Posts: 5406
- Joined: Wed Jul 28, 2010 3:28 am
- Location: Wettest corner of Orygun
@Marius,
I see you are chasing the market and trying to be one of the heard, which is going to kill your profits in the long term. You are going up and down psychologically with the market and that's who loses in the end.
The smart investors see opportunity where you see loss. The smart investors get ready to sell when you're buying.
Why did you buy Gold at the top of a huge historical run? You might look at the long term trend of something before you buy it.
When you were buying Gold, most savvy investors were selling and locking in their profits after a huge run up.
Try to do things differently than the large heard following the experts on CNBC.
You're saying you are "sitting right now on your GLD and reading" , but a lot of investors are buying more GLD now precisely because it's crashing.
Hope that helps...
I see you are chasing the market and trying to be one of the heard, which is going to kill your profits in the long term. You are going up and down psychologically with the market and that's who loses in the end.
The smart investors see opportunity where you see loss. The smart investors get ready to sell when you're buying.
Why did you buy Gold at the top of a huge historical run? You might look at the long term trend of something before you buy it.
When you were buying Gold, most savvy investors were selling and locking in their profits after a huge run up.
Try to do things differently than the large heard following the experts on CNBC.
You're saying you are "sitting right now on your GLD and reading" , but a lot of investors are buying more GLD now precisely because it's crashing.
Hope that helps...
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jennypenny
- Posts: 6910
- Joined: Sun Jul 03, 2011 2:20 pm
@C40
"Also, why do you assume that the preppers with gold would have no food or shelter?"
I might not have explained my point of view well, but when I referred to food and shelter I was referring to non-preppers who might be without food and shelter. I was trying to ask the rhetorical question about who those with the physical gold will be buying stuff from.
I really don't get it. So I've got some gold and silver, if things are so bad that I need gold and silver who is going to trade me goods and services for my gold and silver?
It seems like I'd be better off using the money to buy a piece of property in a more remote location, install a bunker, fortify it with supplies, etc.
If it's not good for a SHTF scenario (IMHO), then I think it functions more like an investment and should have been sold to lock in a return. Then that money could have been used to accumulate more preps, pay down debt, etc.
I also feel sorry for the people that transferred their IRA's into gold investments based on the slick marketing campaigns that have been so prevalent for the past 2 or 3 years.
"Also, why do you assume that the preppers with gold would have no food or shelter?"
I might not have explained my point of view well, but when I referred to food and shelter I was referring to non-preppers who might be without food and shelter. I was trying to ask the rhetorical question about who those with the physical gold will be buying stuff from.
I really don't get it. So I've got some gold and silver, if things are so bad that I need gold and silver who is going to trade me goods and services for my gold and silver?
It seems like I'd be better off using the money to buy a piece of property in a more remote location, install a bunker, fortify it with supplies, etc.
If it's not good for a SHTF scenario (IMHO), then I think it functions more like an investment and should have been sold to lock in a return. Then that money could have been used to accumulate more preps, pay down debt, etc.
I also feel sorry for the people that transferred their IRA's into gold investments based on the slick marketing campaigns that have been so prevalent for the past 2 or 3 years.
From Duke University Professor Campbell Harvey via CBS News:
Gold as an inflation hedge
Despite the widely held belief that gold is an inflation hedge, gold has historically been a poor hedge against higher prices in the short or intermediate run. For example, the price of gold hit $850 per ounce on January 21, 1980. By March 19, 2002, gold had fallen to $293 per ounce. Note that the inflation rate for the period 1980-2001 was 3.9 percent per year. So the loss in real purchasing power was about 85 percent.
http://www.cbsnews.com/8301-505123_162- ... g-in-gold/
Gold as an inflation hedge
Despite the widely held belief that gold is an inflation hedge, gold has historically been a poor hedge against higher prices in the short or intermediate run. For example, the price of gold hit $850 per ounce on January 21, 1980. By March 19, 2002, gold had fallen to $293 per ounce. Note that the inflation rate for the period 1980-2001 was 3.9 percent per year. So the loss in real purchasing power was about 85 percent.
http://www.cbsnews.com/8301-505123_162- ... g-in-gold/
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RealPerson
- Posts: 875
- Joined: Thu Nov 22, 2012 4:33 pm
An investment that has a history of spending decades in the doldrums without interest or dividends is not really an investment. It is a "greater fool theory" speculative instrument. Let's just hope that a greater fool will buy my stuff for even more than I paid (I am not suggesting that people who own gold are fools. This is just a phrase). Granted, gold was important over the centuries. Then again, Roman soldiers were sometimes paid with salt (rare and costly then), so maybe we should invest in table salt.
You can't eat or drink your gold, so it is not likely to be helpful if the world is coming to the end. Theoretically, you could use it to build a shelter, but that is one expensive shelter.
You can't eat or drink your gold, so it is not likely to be helpful if the world is coming to the end. Theoretically, you could use it to build a shelter, but that is one expensive shelter.
As bbqguy pointed out, "the price of gold hit $850 per ounce on January 21, 1980. By March 19, 2002, gold had fallen to $293 per ounce. Note that the inflation rate for the period 1980-2001 was 3.9 percent per year. So the loss in real purchasing power was about 85 percent", gold is pure psychology. Even hard economic facts that supposedly drive gold are hit and miss. Rarely do you find a company cranking a high profit margin undervalued unless there is doubt they can continue doing it. Apple is that right now and it is starting to look very very nice based on fundamentals and future events.
@jennypenny
That's a damn valuable safe...Coleco Vision rules! Atari was too common.
@jennypenny
That's a damn valuable safe...Coleco Vision rules! Atari was too common.
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George the original one
- Posts: 5406
- Joined: Wed Jul 28, 2010 3:28 am
- Location: Wettest corner of Orygun
> Even hard economic facts that supposedly drive
> gold are hit and miss.
There is one hard fact that can drive gold down... a nation unloading its gold reserve. England did that in the '90s, driving the price down to just a touch over the cost of production at the cheapest mines. Some suggest that Cyprus or one of the PIGS are doing that now.
> gold are hit and miss.
There is one hard fact that can drive gold down... a nation unloading its gold reserve. England did that in the '90s, driving the price down to just a touch over the cost of production at the cheapest mines. Some suggest that Cyprus or one of the PIGS are doing that now.
The high gold price is driven by people believing gold has some money essence in it making it "real money" instead of it being a commodity used mostly for jewelry. That crew will keep the price from returning to historical levels especially given the current destruction of economies around the globe. On top of that is a classic speculative bubble, which has just popped and I think it will go down a bit more.